A produce retailer that was targeted by provincial tax authorities won a legal battle after the Quebec Access to information tribunal held that Revenu Quebec must turn over information to the company as “Crown priority” cannot be invoked by the agency in access to information matters.
Canada Revenue Agency has been ordered to pay nearly $5 million in damages to two well-known Montreal businessmen after conducting a tax investigation into an offshore investment vehicle they held.
More than four years after the federal government introduced an offshore tax evasion tip line to fight offshore tax evasion and aggressive tax avoidance, Quebec’s tax authority is following suit by launching a whistleblower program that will offer monetary rewards.
The Quebec Court of Appeal has ruled the province’s tax authority can issue demand letters and request the disclosure of financial information from third parties outside the province to determine whether a taxpayer is subject to the province’s tax laws.
Why it matters: It is widely expected that Revenue Quebec will now issue more demand letters to third parties outside the province even though questions remain over the scope of the ruling.
Quebec Superior Court overturned a ruling that held that the investigative methods used by federal and provincial tax authorities to investigate corruption in the Quebec construction industry were “highly reprehensible,” paving the way for Canada Revenue Agency and Revenue Quebec to once again pursue tax evasion inquiries that were put on hold for the past two years.
In a series of concurrent decisions, Quebec Superior court Justice Daniel Payette held that the investigation conducted by tax authorities did not contravene the leading Supreme Court of Canada decision in R. v. Jarvis,  3 SCR 757, which draws a distinctions between civil tax audits and criminal tax investigations.
Nearly six months after 20 Revenue Quebec officials raided the Montreal offices of Uber Canada Inc. as part of a tax investigation, the popular ride-sharing service won a legal battle against the provincial taxman after the Quebec Court of Appeal overturned a lower court ruling and held that the seized evidence must be sealed.
The succinct 12-page ruling will likely pave the way for more applications for impoundment as the courts and tax authorities grapple with the challenges posed by e-commerce, disruptive business models, and technology, according to tax lawyers.
“The ruling demonstrates that the courts and tax authorities have no choice but to adapt to today’s technology,” noted Alexandre Dufresne, managing partner of Spiegel Sohmer in Montreal.
Revenue Quebec was ordered to pay $2.4 million, including $1 million in punitive damages, to a Montreal business after the Quebec Court of Appeal found that the provincial fiscal authority abused its powers and acted maliciously and in bad faith.
In a decision that sternly rebukes the provincial tax authority for abusing its “extraordinary powers,” the appeal court ruling held that Revenue Quebec owes a general duty of care and good faith to taxpayers as well as an “obligation to compensate” taxpayers who were the victims of wrongful conduct, according to tax lawyers.
A “highly reprehensible” and illegal probe by the Canada Revenue Agency that failed to draw the distinction between a civil tax audit and a criminal tax investigation has put into jeopardy several tax evasion criminal cases involving Quebec construction companies and corruption charges against former federal civil servants, according to tax experts.
In a precedent-setting ruling that appears to bring more clarity to the leading Supreme Court of Canada decision in R. v. Jarvis ,  3 SCR 757, Court of Quebec Justice Dominique Larochelle held that the evidence produced to charge the owner and three other company officials of a Montreal company, B.T. Céramiques, was obtained illegally because federal tax officials crossed the “Rubicon” and failed to inform the taxpayers that the inquiry had turned into a criminal investigation, thereby breaching their right to freedom from self-incrimination and right to reasonable expectation of privacy guaranteed under s.7 and s.8 of the Charter of Rights and Freedoms.
The Quebec provincial government should follow Manitoba’s lead and eliminate the business tax for small and medium-sized business with net taxable earnings under $500,000 so long as they invest the amounts saved in employment, innovation, and production, suggested the head of a Montreal accounting firm at a tax conference.
The latest Quebec budget has put the province in a better position to grow and prosper by gradually lowering the general corporate tax rate but the provincial government should contemplate abolishing income tax for small businesses to stimulate the economy even more, said Emilio Imbriglio, the president and chief executive officer of Raymond Chabot Grant Thornton.
An unprecedented international collaboration on tax reform that recently unveiled sweeping plans to crack down on aggressive tax planning by multinational companies has the potential of becoming the biggest shake-up in international tax rules in nearly a century, according to tax professionals.
Endorsed by G20 finance ministers and leaders, the ambitious proposals by the Paris-based Organisation for Economic Co-operation and Development (OECD) aims to close loopholes, increase transparency to assist tax authorities in risk assessments, and restrict the use of tax havens to curb many international tax planning strategies.
The plan, known as the Base Erosion and Profit Shifting (BEPS) project, lists 15 specific actions intended to establish coherent rules for corporate income taxation, prevent tax treaty abuse, tackle the tax challenged posed by the digital economy, and amend the world’s 3,000 bilateral tax treaties through a multilateral instrument.
Barely a month after the European Commission ruled that Starbucks Corp. and Fiat Chrysler Automobiles NV benefited from illegal tax deals from the Dutch and Luxembourg governments, cross-border tax avoidance will be the subject of yet more intense scrutiny after European Union lawmakers decided recently to quiz 11 multinational corporations over sweet-heart tax deals with governments.
While multinationals are under growing public criticism for using tax avoidance strategies such as assigning valuable patent rights to shell companies based in tax havens or receiving interest deductions for payments made to their own subsidiaries, tax competition too is responsible for the dire situation, said Peter Dietsch, author “Catching Capital – The Ethics of Tax Competition.”